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IBM Watson Commerce Adopted by Ernes to Boost Profitability

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International Business Machines Corporation (IBM - Free Report) has announced that its cloud-based pricing optimization solution - Watson Commerce - has been selected by the Ermes Group, the biggest retailer in Cyprus so as to maximize profits during product markdowns.

International Business Machines Corporation Price and Consensus

How will it Help Ermes?   

In today’s world, many retailers take the route of product pricing markdowns to move their stagnant inventories. However, ascertaining which product lines to put on sale, determining the optimum price point and timing the sale correctly are a challenge for retailers and take a lot of time when done manually.

With IBM’s cloud-based Watson Price Optimization tools, Ermes Group will not only be able to offer great deals to cost-conscious customers, but also cut down on losses and maximize its profits.

With IBM Watson Commerce, Ermes will now be able to determine automatically which product lines in its stores needs to be moved off the shelves, at what price point and most importantly when to make the cut.

What Does This Mean For IBM?

IBM’s cognitive solution IBM Watson is witnessing growing adoption across many industries. Recently, IBM Watson Health and San Diego-based genome sequencing firm Illumina (ILMN - Free Report) inked a partnership to achieve better interpretation of genome data through the integration of Watson for Genomics with Illumina’s tumor sequencing protocol and the BaseSpace Sequence Hub. (Read More: IBM Watson Partners with Illumina to Advance Cancer Research).

Moreover, during Dec 2016, IBM’s Watson was adopted by the Lotte Group to drive innovation across its business verticals. (Read More: IBM's Watson to Enable Lotte Gain Insight into Customer Data).

Also, during the same time, IBM’s Watson was adopted by Unruly, a British ad tech company to build a new cognitive powered psychographic targeting tool in order to make digital video ads more targeted toward its audience and thus more effective. (Read More: IBM Watson to Make Unruly's Digital Video Ads More Targeted).

Per an IDC report, worldwide spending on cognitive systems and artificial intelligence is estimated to be over $47 billion by 2020 from $8 billion at present. The segment is projected to grow at a CAGR of 55.1%. However, with the presence of big players like Alphabet (GOOGL - Free Report) owned Google’s DeepMind, Amazon’s (AMZN - Free Report) Amazon AI and Microsoft’s Artificial Intelligence and Research Group, stiff competition persists.

Given IBM Watson’s growing popularity, we anticipate to see more such adoptions in the future, which will definitely have a positive impact on the company’s bottom line.

Stock Performance Overview

Shares of IBM have underperformed the broader Zacks Computer Integrated Systems industry over the last 12 months. While the industry generated a return of 39.7%, the stock gained 28%.

The underperformance of the stock could be due to the ongoing and heavily time-consuming business model transition to the cloud. Further, sluggish IT spending, particularly in on-premises and data center hardware, and foreign exchange volatility are the primary concerns. Also, intensifying competition in the cloud has remained a major headwind for the stock.

Zacks Rank

At present, IBM carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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